Australia’s Federal Court has ruled that Bit Trade Pty, the operator of the Kraken cryptocurrency exchange in Australia, failed to meet design and distribution obligations for its margin trading product. The case, initiated by the Australian Securities and Investments Commission (ASIC) in September 2023, centred on Bit Trade’s failure to determine an appropriate target market before offering the product, despite prior warnings.
The court’s ruling highlights the legal requirement for financial products to be appropriately distributed to consumers. ASIC argued that the obligation to repay digital assets or national currency classified the margin trading product as a credit facility, which required stricter compliance. ASIC’s Deputy Chair, Sarah Court, emphasised the significance of this outcome as a reminder to the crypto industry about the importance of adhering to regulations.
Bit Trade, a subsidiary of US company Payward Incorporated, expressed disappointment with the decision but stated its readiness to comply with the court’s ruling. The company has seven days to negotiate declarations and injunctions with ASIC, which plans to pursue financial penalties against Bit Trade at a later date.
In addition to this case, Kraken’s parent company is also under scrutiny in the US, where the Securities and Exchange Commission filed a lawsuit in November 2023, accusing Kraken of operating as a securities exchange without proper registration.
Ark Labs, a young startup focused on enhancing bitcoin transactions, has secured $2.5 million in pre-seed funding. The funding round, led by billionaire investor Tim Draper, saw participation from Draper Associates, Fulgur Ventures, Axiom Capital, and angel investor Stephen Cole. The investment highlights Silicon Valley’s growing interest in making cryptocurrency, particularly bitcoin, a mainstream payment method.
Despite bitcoin’s status as an important asset class with billions in trading inflows, experts suggest it needs broader utility to maintain high-interest levels. Ark Labs plans to use the funds to expand its team and improve its technology to facilitate quicker and more cost-effective bitcoin transactions.
Tim Draper, a seasoned investor in tech giants like SpaceX and Tesla, emphasised the need to make bitcoin a viable medium of exchange for everyday use. He believes Ark Labs’ technology will contribute to seamless bitcoin payments, advancing its adoption as a practical currency.
The startup’s efforts align with a broader trend of mature investors and capital increasingly backing bitcoin, a shift that could drive the cryptocurrency’s evolution and greater acceptance as an asset class.
Mercado Pago, the financial technology arm of Latin American e-commerce giant MercadoLibre, has introduced a stablecoin called Meli Dolar in Brazil. The new digital currency is pegged to the US dollar at a one-to-one value and is available to all Mercado Pago clients through the company’s app.
The launch expands Mercado Pago’s crypto offerings, including assets like bitcoin and ether. Also, the introduction of Meli Dolar marks Mercado Pago’s latest move into the cryptocurrency market in Brazil, the company’s largest market.
In 2022, MercadoLibre also launched MercadoCoin, a cryptocurrency tied to its loyalty program. Mercado Pago has announced that clients will not be charged fees for trading Meli Dolar, and the crypto asset platform Ripio will facilitate these transactions as an exchange and market maker.
Tether, a leading cryptocurrency company, announced plans to introduce a new stablecoin pegged to the United Arab Emirates (UAE) dirham, aiming to offer an alternative to the US dollar. Stablecoins, digital tokens backed by traditional currencies, are commonly used for payments and trading on crypto exchanges. Tether’s CEO, Paolo Ardoino, highlighted the growing interest in holding dirhams outside the UAE, citing the currency’s stability and the nation’s robust economic position.
The UAE is positioning itself as a global hub for the crypto industry, rapidly enabling cryptocurrency payments in areas such as real estate and education. The country is also developing virtual asset regulations in Abu Dhabi and Dubai, fostering increased adoption and transaction volumes. Despite the growth, regulators have warned of risks associated with crypto assets, particularly concerns over stablecoin reserves and the potential for rapid outflows.
Tether, whose dollar-pegged stablecoin (USDT) dominates the market with $117 billion in circulation, plans to launch the dirham-backed stablecoin in partnership with Abu Dhabi-listed Phoenix Group and Green Acorn Investment. While a specific launch date has not been provided, the licensing process with the UAE Central Bank is expected to take several months.
German authorities have seized nearly €25 million in cash during a large-scale operation targeting illegal cryptocurrency ATMs. The operation uncovered 13 machines operating without the necessary permits, posing significant risks related to money laundering. These unlicensed ATMs were used for trading bitcoin and other cryptocurrencies, prompting the swift action from the country’s financial regulator, BaFin.
Across 35 different locations in Germany, 13 ATMs were found. The lack of proper authorisation for these machines meant they could be exploited for illicit activities, heightening concerns about financial crimes within the cryptocurrency market. The seizure of such a large sum of cash underscores the scale of the problem and the authorities’ determination to clamp down on illegal financial operations.
Collaboration between BaFin, law enforcement agencies, and the German Bundesbank was key to the success of this operation. By working together, these organisations were able to effectively identify and shut down the unauthorised ATMs, preventing further potential misuse of these machines. However, the operation highlights the ongoing efforts by German authorities to regulate the rapidly evolving world of cryptocurrency.
The seizure marks a significant step in Germany’s efforts to enforce stricter regulations on cryptocurrency trading. As the popularity of digital currencies grows, so too does the need for robust oversight to prevent financial crimes. The operation serves as a warning to those attempting to bypass regulations and operate outside the law in the cryptocurrency industry.
US-based State Street Corporation, a global financial and banking service provider and Swiss crypto company Taurus have announced their partnership to expand their offerings of digital assets through new services. As per the joint statement, under the partnership, Taurus will provide State Street with crypto custody and asset tokenisation services to institutional clients like banks and asset management firms.
State Street’s chief product officer and head of digital asset solutions, Donna Milrod, stated, ‘We need to provide our clients the ability to deal with both traditional finance as well as (digital assets) side by side.’ The following move will help the company meet the market demand for safe banking partners that protect investors’ crypto assets, offering an alternative to exchanges and wallet providers with weaker security measures. Milord added that plans to offer crypto custody for customers are contingent upon the US Securities and Exchange Commission updating its 2022 accounting guidelines, making it highly costly for publicly traded banks to hold crypto.
Why does this matter?
There has been an increase in the spread of cryptocurrencies in the traditional financial system through regulated products like futures and exchange-traded funds. As financial institutions look for ways to hedge inflation and diversify their portfolios, they turn to crypto. Thus, with the significant rise of digital asset’s impact on traditional finance, there’s a gradual blurring of the distinction between these two previously distinct financial systems.
The Bank of Ghana has introduced draft regulations to establish a secure framework for the cryptocurrency sector. The proposed rules aim to enhance financial inclusion while safeguarding consumers against financial crimes. Virtual asset service providers (VASPs) will need to register with authorities and adhere to strict guidelines. Commercial banks are prohibited from directly engaging with virtual asset businesses.
Ghana’s increasing digital asset usage, driven by widespread internet access, has prompted the need for regulation. The central bank’s analysis highlighted the role of cryptocurrencies like Bitcoin and USDT in cross-border payments and remittances. The regulations are designed to address money laundering, fraud, and cybersecurity risks, aligning with international standards.
The proposed regulations will primarily oversee cryptocurrency exchanges and VASPs. These entities must register with either the Bank of Ghana or the Ghanaian Securities and Exchange Commission. They are also required to meet capital requirements and implement risk management frameworks. Financial institutions can only provide services to registered VASPs, with direct dealings with virtual asset businesses strictly prohibited.
Before the regulations are finalised, the Bank of Ghana plans to conduct sandbox testing to refine the rules. The public has been invited to submit feedback on the proposed regulations until the end of August.
A coalition of cryptocurrency advocates, including billionaire Mark Cuban and financier Anthony Scaramucci, is urging Kamala Harris to reform the Democratic party’s policy on digital assets. The newly established Crypto4Harris group convened virtually to advocate for an end to the Biden administration’s stringent regulations on the cryptocurrency industry. They argue that current policies risk pushing the industry overseas and are pushing Harris to support a comprehensive policy reset.
Senate Majority Leader Chuck Schumer also joined the conversation, indicating a desire to pass new crypto legislation this year. The group plans to support Kamala Harris’s campaign with nationwide fundraisers in September and is working to identify potential crypto-friendly candidates for regulatory positions if Harris is elected.
Despite Crypto4Harris’s efforts, the Harris campaign has yet to publicly address its stance on cryptocurrencies. This initiative highlights a growing effort within the Democratic party to engage with the crypto sector, particularly as some crypto advocates consider shifting support away from Republican nominee Donald Trump, who has made pro-crypto promises.
The ongoing regulatory clash between the industry and the SEC, which views many crypto tokens as securities, has sparked debate. While Harris’s campaign has met with major crypto firms, concrete policy positions remain unclear, and upcoming Democratic events may provide further insight into the party’s approach to digital assets.
Talen Energy is shifting its focus towards data centre development, driven by rising demand from AI and cloud computing sectors. The company is considering moving away from its crypto mining operations, which it no longer sees as a strategic asset. This shift comes as Talen’s shares have surged nearly 100% since the start of the year, reflecting the company’s successful adaptation to the growing power needs of data centres.
The company has revised its earnings and free cash flow forecasts upwards, benefiting from increased power usage, higher prices, and payments from PJM Interconnection. The warm weather during the second quarter also contributed to this positive outlook. Talen now expects to generate $720 million to $780 million in adjusted EBITDA for 2024 and has adjusted its free cash flow estimates to between $245 million and $285 million.
Talen is also anticipating $670 million in capacity revenues for the 2025/2026 planning year, a significant increase of $470 million compared to the previous year. The company expects the release of $300 million from an Amazon data centre escrow in the third quarter. The data centre development is under scrutiny from regulated utilities concerned about potential cost increases for regular power customers.
The Federal Energy Regulatory Commission (FERC) is currently reviewing the interconnection agreement for the data centre and plans to hold a technical conference on co-located data centres this autumn. Despite the ongoing regulatory review, Talen’s CEO remains optimistic about receiving approval for the amended agreement.
The US Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency company NovaTech and its founders, Cynthia and Eddy Petion, accusing them of fraudulently raising over $650 million from investors worldwide. The SEC claims that the Petions assured investors their funds would be secure, with promises of profits from the outset. However, the lawsuit alleges that the couple used new investments to pay off earlier investors and commissions to promoters while diverting millions for personal use. The scheme reportedly continued for four years until NovaTech collapsed in May 2023.
The legal dispute follows a separate lawsuit by New York Attorney General Letitia James in Manhattan, where the fraud was estimated to exceed $1 billion. Both regulators have labelled the operation a pyramid scheme, noting that NovaTech enticed victims through religious appeals on social media, often using platforms like Telegram and WhatsApp to target Haitian-American communities. Cynthia Petion was known to portray herself as the ‘Reverend CEO,’ suggesting NovaTech was part of a divine plan.
The SEC has also charged six NovaTech promoters with fraud, accusing them of continuing to recruit investors despite numerous warning signs, such as delayed withdrawals and regulatory actions in the US and Canada. One promoter, Martin Zizi, has agreed to pay a $100,000 civil fine, though his legal representation has not commented.
The lawsuits in Miami and New York seek restitution for the defrauded investors and civil penalties. The Petions, believed to reside in Panama, have yet to be located for comment, and no legal representatives have been identified. Both cases highlight the significant legal challenges NovaTech faces as authorities seek accountability for the alleged misconduct.
The SEC’s case against NovaTech is being heard in the US District Court for the Southern District of Florida. The lawsuits aim to recover losses for investors and impose financial penalties on those involved in the fraudulent scheme.
